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International Relations and Trade

Speaking to the UN Conference in Chile in 1972, Robert S. McNamara , Pres.., World Bank, urged that we get on with the world development task of this decade. He says "our clear duty... is to face up to mass poverty for what it really is, determine its dimensions, locate its whereabouts, set a limit beneath which we will not accept its continuance, and make our first priority a threshold of human dignity and decency which is achievable within a generation. He finds the state of development in most of the developing world unacceptable because development programs have been directed largely at gross economic goals and have failed to insure that all nations and all groups within nations have shared equitably in the economic advance,

In the developing world, children under age five account for only 20% of the population but foe more. than 60% of the deaths; and two-thirds of those who live are restricted in growth by malnutrition... are 100 million more adult illiterates than there were 20 years ago. In light of such human conditions the goal of an overall GNP growth goal of. 5% by the close of the First Development Decade (60's) must be considered unacceptable.

The GNP rate of a country expressed in per capita terms is usually con to give a sound picture of the level of economic development in the country. But McNamera points out that the average figure conceals the unevenness of the growth rate and shows that actually income. grew the least where it was needed most, example, "The major oil-exporting countries, with less than 4% of the population, enjoyed a GNP growth rate not of 5%, but of 8.4% and the poorest countries -- those with a per capita GNP of less than $200--with an overwhelming 67% of the population, had a growth rate of only 3.79%." And "in the poorest countries, with 67% of the population, per capita income during the First Development Decade grew at only. 1.5% annually" while "in the oil-exporting countries, it grew more than three times as fast: 5.2%." So, the rates of growth of GNP, and of GNP per capita really tell us nothing about how income is actually distributed within a country.

What can be done? The international development community must promptly move forward with practical sound financially feasible measures which command the requisite public support.

1. The maldistribution of income within developing countries.

Economic growth is a necessary but not sufficient condition for devel opment, and is likely in early stages to penalize the poorest (cud even the small middle-income) segments of the society relative to the more affluent sectors. Action needed within countries to reduce "crushing disparity of opportunity" includes: more equitable and comprehensive tax measures; land reform laws; tenancy security policies; etc. and these must be fully and fairly enforced, Requisite to such action is the determination to move against the inequities of income distribu- tier. Although difficult, political leaders must weigh the risk of unpopular but necessary social reform against the risk of social rebellion, The goals cannot be met, however, without external assistance in both aid and trade.

2. The need for Official Development Assistance.

In adopting the strategy for the Second Development Decade, the developed countries agreed that the local of external aid (as ODA) should reach .7% of their GNP's by 1975. Some countries are at, above, or near the target. The U.S. was 31% in 1970 and is likely to fall to around .24% by 1975. Flows for the first half of the decade are likely to average at about .35% of GNP, only half of the target. Projected growth in developed countries shows that the .7% target was not too ambitious. What, then, is the problem? McNamara thinks it is primarily a matter of ignorance. The constituency of the wealthy nations must be better informed about the inhuman conditions which characterize the lives of people must be better mobilized and better motivated to grasp the severity of maldistributton of income between rich and poor nations and to understand how modest the amounts are for wealthy nations. If the ODA flows level off at substantially less than the target for the decade, debt problems for the developing world are inevitable. The trade deficit would grow by approximately 7.5% a year (in current prices) and the developing countries will either have to reduce their rates of growth or increase their debts above reasonable levels.

3. The expansion of trade.

Given the current fall off of ODA, the most imperative need of developing countries is greatly to expand their export earnings. McNamara says "action must be taken to help stabilize and expand the agricultural exports of those developing nations which are dependent on them. And for those countries with the potential for exports of manufactured goods, discriminating barriers to markets must be removed and preferences made available." McNamara sums:

Just as we must conclude that it is the responsibility of the politicalleader's of the developing nations to recognize the inequities that exist

Within their nations and to move to correct them, so we must likewise conclude that the wealthy nations of the world--possessing 25% of its people, but 80% of its wealth --should move now to provide additional assistance can be financed by diverting but a tiny percentage of the incremental income which will accrue to the developed countries during the 1970's.

The duty is clear. In an international context the query is: Do we have the will to develop a concerned citizenry, and economic and political leaders who will act on the basis of an understanding that economic growth is interdependent with social development--the development of human resources?

Mildred Sikkema

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